I closed the year for clients in my Private Client Services – Corporate this morning. It was a two-hour presentation where I offered perspectives on how 2021 would be. I have modelled PCS-C after private banking where you serve special bank customers in personalized ways. Specifically for Nigeria, I told our business leaders that Nigeria would be devaluing the Naira very very soon. I expect the next exchange to be in the range of N405 to N415.
This is not a debatable matter because some of the loans which Nigeria took require that recalibration. Yet, I expect the Naira to become more stable due to the new remittance policy where banks pay recipients in US dollars. That policy will provide more US dollars supply and stabilize the forex equilibrium rate.
The Central Bank of Nigeria (CBN) team just ended a great week on policies. I think they deserve our commendations. I understand that the economy is still hurting. But over the last few days, the CBN is recalibrating. I am reversing my projection on the continuous deterioration of Naira against the US dollars at scale; the marginal loss remains due to our poor productivity quotient and overall poor balance of trade.
The CBN under Governor Emefiele ran a solid good monetary policy under President Jonathan. But at the inception of the President Buhari administration, he cannibalized what was working. It was very strange and I have written here to show my frustration on the evolution of these policies.
But today, they are getting back to the fundamentals. I expect more funding for startups. I also expect more remittance hitting Nigeria. In short, the biggest export Nigeria has run for years now is the human capital. And those citizens reward the nation via remittance. I estimate about $1.8 billion – $2.2 billion monthly remittance into Nigeria. If that happens, that means more foreign currency will be in circulation, giving Naira a breathing space.
To allow our members to speak freely and ask questions, we do not record the conversations. Only me is identified. My overriding message is that private companies will do well mainly due to productivity which digitalization has unleashed in most sectors.
(Meanwhile, we have also opened Private Client Services- Startup for 2021: we welcome your application.)
I have opened applications for a new batch into my Private Client Services: Startup Growth. This service offers founders, CEOs and entrepreneurs 24/7 access to me. We talk over business mechanics, strategies, growth and wins. We bring our people, invisible but great, to make those wins happen. This call is global as PCS has founders from the United States, Germany, Nigeria and beyond.
If you are an innovator and doing something amazing in any part of the world, you would like to be part of our portfolio. You have an option to be completely “invisible” with no one knowing we are working together. When banking talks of private banking, we talk of private client services for startups, and if you get in, we charge no fees.
As we look at the projection on Naira, I invite you to check our 2021 Outlook (video below). I expect 2021 to be a year of accelerated growth due to the fact that technology through digitization has brought higher productivity in markets.
Naira will stabilize but that stabilization will be towards the end of Q1 2021, and I expect that to happen above N405 per US$1 at the official rate.